topic Home Business Deduction in Business & farm

Home Business Deduction

kbcouch — Fri, 07 Feb 2020 17:22:03 GMT

I have a home business for consulting work and I sold leggings. This past year I sold the remainder of my inventory of leggings at a loss, about 1/2 of my cost. Where do I account for this under the expenses of my home office? And how do you label it?

Re: Home Business Deduction

RobertG — Fri, 07 Feb 2020 17:53:15 GMT

You report them as the cost of goods sold.

Your beginning inventory is your ending inventory from last year.
Any purchases of leggings in 2019 is added as purchases.
Then ending inventory, (if any), is subtracted to arrive at the cost of goods sold.

If you already deducted the cost of the leggings in a prior year, then your beginning inventory is zero. You can't deduct the expense twice.

Re: Home Business Deduction

kbcouch — Fri, 07 Feb 2020 18:45:42 GMT

I have not deducted anything previously.

Re: Home Business Deduction

RobertG — Fri, 07 Feb 2020 18:55:32 GMT

Ok. So you can deduct the cost of the leggings as Cost of Goods Sold on Schedule C.

You don't need to track inventory, or report end of year inventory if you claim it all as Cost of Goods Sold for the year.

Re: Home Business Deduction

kbcouch — Fri, 07 Feb 2020 21:00:06 GMT

So, where within my expenses do I account for this, a schedule C is created when I itemized my deductions.

Re: Home Business Deduction

ColeenD3 — Fri, 07 Feb 2020 21:15:04 GMT

Please see the steps for entering inventory in the link below.

Inventory

Re: Home Business Deduction

kbcouch — Fri, 07 Feb 2020 22:41:10 GMT

I'm sorry! It won't take me to Schedule C, when you search it tells you to open or continue your return or search for Schedule C!!

Re: Home Business Deduction

JulieS — Fri, 07 Feb 2020 23:00:12 GMT

It goes in the same area where do you report your income and expenses for your home business.

That is your Schedule C. It is actually called self-employment income and expense in Turbo Tax.

Re: Home Business Deduction

kbcouch — Fri, 07 Feb 2020 23:02:07 GMT

Yes, that is what I thought! However, under what Expense category does it go and how do you label it?

Re: Home Business Deduction

ColeenD3 — Fri, 07 Feb 2020 23:13:35 GMT

Please see the screen shot below. Inventory is under "Less Common Expenses".

Re: Home Business Deduction

kbcouch — Sat, 08 Feb 2020 02:15:37 GMT

Ahh, got it...ok now I need some help! The first thing it asks is beginning/ending inventory, is this the value? If so, let's say $6,000 beginning and $500 at the end. Then it asks in the next page Cost of Purchases is again, $6,000 spent on the original inventory, but then it gives strange numbers for the deduction like total sales $9,600, COGS $11,500 and GP -$1,900. I am so not understanding what and how this is figured!

Re: Home Business Deduction

kbcouch — Sat, 08 Feb 2020 02:18:43 GMT

Also, I just noticed that my 'Home Office' deduction went from roughly $2,200 down to $956, how did this affect this?

Re: Home Business Deduction

kbcouch — Sat, 08 Feb 2020 03:21:40 GMT

Ok, nevermind the first question...got it all figured out! I needed to 'add another line of work' and that will solve my issues. But, it is still showing my home office deduction incorrectly...this new added line of work is not a 'home office'. It is stating that I will have a carry-over into 2020 for $1,446. Why is it a carry-over?